Assessment of Biogas Plant Firms by Application of Annual Accounts and Financial Data Analysis Approach

Mattia Iotti,Giuseppe Bonazzi

doi:10.3390/en9090713

Abstract

Firms operating biogas plants are often characterized by making significant investments in fixed assets financed by equity and, mainly, financial debt. These firms have experienced significant growth in Italy, partly as a result of public contributions. The objective of the research is to analyze the management of biogas plant firms by analyzing annual accounts as the main document of use to third parties for the evaluation of a firm’s management. The research, conducted on a sample of 22 firms using 110 year-data, has highlighted that economic and financial margins are different, though often statistically correlated. The research shows that profitability and cash generation in the biogas plant industry are high, even if the generation of cash flow is less than the return on equity, and there are firm cases of having difficulty in financial debt repayment, even in the presence of positive economic margins. The research also shows that return on equity greatly exceeds the performance of Italian government bonds and of the majority of industrial sectors; this result points to the significant increase in returns on equity capital in the industry, potentially damaging other sectors, and highlighting the risk of the distortive use of public resources.

Highlights

Agriculture has played a central role throughout history
The article analyzed a sample of 22 companies operating in the biogas plant sector in Italy, with the plants located in the Lombardia, Emilia Romagna and Veneto regions
In Italy, the biogas plant industry is characterized by a high absorption of capital, in fixed asset cycles

Summary

Introduction

Agriculture has played a central role throughout history. It has served as a primary source of food and has had as major side effect, its impact on the environment [1,2,3]. Agriculture plays a central role in the socioeconomic system, given its impacts on sustainability, the environment and health. Several studies have shown that sustainable agricultural production could provide solutions to food, energy and environmental problems [15] given that the production of renewable energy, agriculture and land use are strictly related [16,17], energy production through renewable sources generates services which have a market price, such as energy, but it produces environmental services that do not pass through market price systems; these effects are defined as externalities, as secondary effects of agricultural activity. To discourage negative externalities and to increase positive externalities, the economic literature and legislative interventions

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